Tax practitioners (as well as taxpayers representing themselves) must familiarize themselves with various sources of tax law in order to resolve tax disputes in the most effective and efficient manner possible. These sources of tax law are divided into legislative, administrative, and judicial sources.
The sources of tax law are legislative and constitutional:
Constitution, statutes, legislative histories, and tax treaties are some of the legislative sources of federal tax law. Federal tax law is based on seven references to taxes in the U.S. Constitution. In the Sixteenth Amendment, Congress is authorized to levy and collect income taxes, but it united does not specify how. Therefore, Congress enacted numerous statutes governing income taxes, estate taxes, and excise taxes.
There are several tax statutes that are not incorporated into the Internal Revenue Code. They appear in title 26 of the United States Code. These statutes include, for example, several tax rules related to retirement benefits that appear in title 29 of the United States Code, which is part of the Labor Code.
Statutes govern federal tax law outside of the Constitution (and tax treaties). A valuable source of federal tax law is the legislative history that led to the enactment of statutory laws. There may be judicial committee reports or even congressional debate documented in the legislative history.
In situations where tax treaties conflict with statutes, they can also be applied. In some cases, Congress may specify that either source applies to specific circumstances when a taxpayer has ties to both the United States and another country.
Courts may find either to be unconstitutional by declaring both tax treaties and statutes unconstitutional. Both bonds the IRS and courts. However, neither is guaranteed when unable to enforce.
Tax law sources:
Treasury Regulations, which are Treasury Departments and IRS statements of law, are among the administrative sources of US Tax Law. A Federal Regulation can either be created by Congress or it can be created by Treasury or IRS administrative powers. It is mainly found in Title 26 of the Code of Federal Regulations that the IRS can follow, but not the courts. There are many detailed examples in the Regulations.
Several of these IRS documents are published weekly in the Internal Revenue Bulletin. They are accumulated every six months in the Cumulative Bulletin. They include revenue rulings, revenue procedures, notices, and announcements. Legal advice, private letter rulings, determination letters, technical advice memos, action on decisions, general counsel Other IRS documents that establish federal tax law include field service advice, technical expedited advice, service center advice, chief counsel bulletins, litigation guideline memos, chief counsel notices, IRS information letters, IRS compliance officer memos, IRS technical assistance, and the internal revenue manual.
Although these sources are not binding on courts or the IRS, they can reveal the IRS’s stance, despite the fact that they are not binding on courts or the IRS.
There are many benefits for taxpayers within these sources of law, but taxpayers fail to take advantage of them. The IRS is all too ready to use these sources of law to support their position.
Tax law’s judicial sources:
Court judicial opinions supplement and sometimes create federal tax laws, explaining, supplementing, and in some cases creating new tax law.
There are varying degrees of authority depending on which court wrote the opinion
U.S. Tax Courts issue regular, memorandum, and summary opinions. However, the U.S. Tax Court limits the precedential authority of its judicial opinions. Memorandum opinions have limited precedential value and summary opinions have no precedential value.
A court may decide the law. It can also interpret Congress’s legislation. Statutory construction is one of the methods courts use for this task (here is an example).
Tax cases handled before the IRS and before the court should consider a source of federal tax law that often favors taxpayers.
Tax law research:
Almost all of these sources of tax law can be found online. We have compiled a list of paid and free tax research tools that you can use to expand your knowledge of tax law. You can access the list of tax research tools by clicking here.Almost all of these sources of tax law can be found online. We have compiled a list of paid and free tax research tools that you can use to expand your knowledge of tax law. You can access the list of tax research tools by clicking here.